Note: This is part III of a five part series. Access the first installment HERE, part II HERE, part IV HERE and part V HERE.
Along with Dr. Seuss’ Green Eggs and Ham and Marcia Brown’s Stone Soup, the seemingly innocuous board game Monopoly has played a pivotal role in the edification of several generations of entrepreneurs.
When you play Monopoly with your children, you can subtly underscore an entrepreneurial mindset in their gameplay which will ultimately help them develop valuable startup skills, as described below.
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Hands On Learning
Although Monopoly originated from a variety of sources and evolved regionally over several decades, it was brought to Parker Brothers in 1934 by Charles Darrow. A number of international versions were developed soon after its initial release, but America has consistently remained the bastion of Monopoly’s popularity. In contrast, the USSR and other communist nations foolishly banned Monopoly, thereby denying their children (and parents) an inexpensive, yet effective hands-on course in entrepreneurship.
Given that over 750 million people have played the game, I will assume that most readers are familiar with its basic rules; my apologies to any readers who are unfamiliar with the game.
Lady Luck – Just like in the real world, luck plays a significant role in the outcome of Monopoly, as two dice dictate each player’s movements around the board. Luck intervenes with the first roll of the dice, which determines the order of play. The players who go first have a higher probability of landing on an available property during their initial trips around the board.
When starting a company, luck plays a bigger role than many successful entrepreneurs care to admit, and a smaller role than unsuccessful entrepreneurs like to claim. The First Mover Advantage in Monopoly is real, but just like in business, its long-term value is nominal.
Most people play Monopoly the same fatalistic way they live their lives. They roll the dice, move their piece around the board and live with the consequences. Encourage an entrepreneurial mentality in your child by demonstrating that they do not have to be satisfied with their luck. Instead, show them that they can increase their odds of success by forming alliances, taking calculated risks and negotiating mutually advantageous deals. Although luck plays a considerable role in the game’s ultimate outcome, you can significantly enhance your chances of winning by strategically cutting deals with your opponents, as discussed below.
Cutthroat Negotiating With A Smile – Monopoly is inherently a social game, which requires your child to establish a rapport with the other players in order to become a successful dealmaker. Often, the best deals are the those in which an alliance is formed with another player, to the detriment of the other players. For instance, you might sell a property to a player that grants them a monopoly, with the proviso that you pay no rent on any of the properties that comprise the newly formed monopoly. Such a deal ensures that your opponents will pay a higher price whenever they land on any of these properties, while you simultaneously increase your cash position by selling the lynchpin property at a premium.
Your child can also create a monopoly by trading properties, with both parties involved in the trade immune from paying future rent on the resulting monopolies. Although it is a violation of Monopoly’s official rules, another creative way to form an alliance is to grant a loan to a fellow player. When creating such “house rules,” explain to your children that entrepreneurs occasionally stretch the boundaries of arbitrary constraints, especially when the impact is innocuous. At the same time, make it clear that honesty is the cornerstone of successful serial entrepreneurship, as described more fully in Time Wounds All Heels.
Even though the game is hypercompetitive by design, your child will likely play with the same basic group of family and friends. As such, they will eventually learn that a one-sided deal cut in one game will carry over to future games, and may limit the other players’ willingness to negotiate. This is a worthwhile real-world lesson. As noted in Nice Guys Finish First, a business model based on screwing people is always ineffective in the long run. Clarify that entrepreneurs benefit in the long run by establishing fair agreements based on mutual gain, rather than crafting one-sided deals that result in short-term gains.
Not Winner Take All – Played in its traditional form, there was only one winner in Monopoly. As stated in its official rules, each player’s goal is to, “become the wealthiest player through buying, renting and selling property.” A negative way of interpreting this objective is to “drive all the other players into bankruptcy." However, there are alternatives to conveying this somewhat antiquated view of business to your offspring.
For instance, Monopoly Jr., recommended for ages 5 to 8, determines the winner by the person who has the most money once the first player runs out of money. If you are a “good” parent, you will be sure to run out of money before your children. ☺
Monopoly Jr. comes in many forms, including an amusement park theme which focuses on various carnival booths and rides, rather than real estate. With older children, you can place a time limit on the game and then determine first, second, third place, (etc.) winners based on the amount of wealth created by each player. This conveys the healthy message that business success is not binary – a company can thrive without driving its competitors into bankruptcy.
Vigilance – You cannot take your eyes off the board when playing Monopoly, as you risk a player landing on one of your properties without paying the appropriate rent. This same dogged vigilance is required in any venture. You must focus on constantly delivering value to your customers and ensure that you are paid for the value you deliver.
Cash Flow – Successful entrepreneurs know that properly managing their cash is one of their primary fiduciary responsibilities, especially during a venture’s early phases. Monopoly is a great training ground to develop rudimentary cash management skills. It also exposes young capitalists to a number of other financial concepts, including: mortgaging properties, paying taxes and interest, dealing with unforeseen expenditures, participating in philanthropy, etc. When the appropriate Chance or Community Chest card is played, you can have a brief discussion with your children regarding each such issue.
For younger players, counting money and calculating the appropriate change are valuable skills. Let your children be the game’s “banker” and be patient while they hone their cash management skills.
Government Intervention – As every successful entrepreneur knows, the government prefers to punish you for your success, rather than reward you for risking it all and creating jobs for your fellow citizens. Monopoly is no different. In addition to the Luxury Tax board space, there are also Chance cards that require you to pay a percentage of your net worth in taxes. Such aspects of the game allow you to explain the balance between a libertarian approach to minimal government intervention in business affairs and the responsibility of each taxpayer to contribute to a society’s communal wellbeing.
Location Matters – In a very real-world sense, the location of your properties is critically important. Some properties have a higher rental charge and some have an increased probability of opponents landing on them. In addition, there are several Chance cards that direct a player to advance to a particular property, as well as cards that require a player to “Go Back Three Spaces”. Each of these factors impact the probability that certain properties will be visited more than others. As noted in Nurture Or Nature, the location your child chooses for their future venture will have a huge impact on its probability of success. Use the game board to explain the fact that not all properties are created equal and the role probabilities play in an entrepreneur’s success.
Tenacity, Persistence & Endurance – One of the most important lessons to be derived from Monopoly is that in business, the spoils often go to those who remain “in the game” the longest. A typical Monopoly session takes hours to complete, and in many cases it becomes a battle of wills to see which players have the requisite stamina to play the game to its conclusion. Thus, as is true with any startup, survival is paramount. Remind your children that if they quit before the game is over, they are assured they will not win. Instead of ending the game when your children are fatigued, simply put it aside, intact, and resume when your kids are refreshed.
Passing Go – With a few exceptions, every time a player passes “Go” on the Monopoly board, they are given $200 by the bank. Even the junior version of Monopoly has this feature, as players receive $2 each time they pass “Go.” These funds often sustain a player and allow them to remain in the game when they would otherwise go bankrupt. Adolescent entrepreneurs are old enough to appreciate the corollary in business; you can establish business models that allow you to collect annuities.
For instance, explain that a business can structure a portion of its sales in the form of evergreen subscriptions, annual maintenance payments and quarterly license fees. Even if it sells capital goods that are one-time purchases, a company can charge its customers an annual service fee to create a recurring income stream. The specific form that such payments will take varies depending on the underlying business model. However, the goal of such payment schemes is to smooth the lumpiness of cash flows by structuring all, or a portion, of the company’s revenue as recurring.
You can further explain to older children that recurring revenue provides startups with greater predictability, which eases their cash management responsibilities. Such annuity revenue allows a venture to stand on the shoulders of each prior month’s proceeds, and thus grow its overall revenue in a stable and linear fashion. Investors and acquirers grant recurring revenue a higher premium, because it reduces a business’s overall risk profile.
Jail – Entrepreneurs have a social and a legal contract with their customers, employees, investors, and other stakeholders. Just like in Monopoly, if this contract is broken, the entrepreneur can be thrown in jail. The Jail board space serves as a reminder to aspiring entrepreneurs that spirited competition is encouraged, as long as it is kept within the acceptable bounds of fair play.
America’s Not-So Secret Weapon
By encouraging your child to play Monopoly with an entrepreneur’s mindset, they will not only enjoy the game more, they will put in practice and internalize a number of skills which will serve them well, irrespective of whether or not they elect the life of an entrepreneur. You will benefit by having hours of fun with your children.
Why has Monopoly, which takes hours to play, moves at a relatively slow pace, is completely devoid of surround sound and offers players no opportunity to blow up combatants in high definition, remained popular over the past 70-years? Part of the reason for its enduring legacy, and its emergence as a popular pastime in burgeoning free-market economies around the world, is its effectiveness as a proving ground for budding entrepreneurs to hone their business savvy, negotiation tactics, and communication skills.
Monopoly is now sold in over 80 countries, and has been translated into over 26 languages. Even citizens of the former Soviet states are now avid Monopoly fans. There are, no doubt, thousands of lively games of Monopoly being played all over the globe, even as you read these words.
“Thank you," Mr. Charles Darrow or should I say, “Без перевода”…
For more suggestions regarding parenting an entrepreneur, check out parts I, II, IV and V of this series.
